The Direct Debit Guarantee: A beginner's guide

A brief explanation of what the Direct Debit Guarantee is and what it means to you.

The Direct Debit Guarantee provides a number of safeguards for customers to protect
them from payments being taken incorrectly or fraudulently. (It is also
known as the “Direct Debit Indemnity”.) In practice, less than 0.2% of payments are
charged back.

We've written about the Direct Debit Guarantee in more detail in our
Direct Debit Guide but thought it might be useful to explain very
briefly what the guarantee is and what it means to you.

How does the Direct Debit Guarantee protect customers

In a nutshell, the Guarantee protects customers in three
ways:

Advance notice. Customers must be told the amount and date of
each payment in advance. To help you check whether you are giving Advance Notice correctly we have put together six quick questions for you.

Immediate refunds. Customers can get a full and immediate refund
from their bank (also known as a “chargeback” or “indemnity claim”)
for any payment taken in error.

Instant cancellations. Customers can cancel a Direct Debit at
any time through their bank.

Three useful tips to prevent non-fraudulent chargebacks

Provide clear contact information and good customer service. This will encourage customers to channel their complaints to you first,
before calling up their bank to request a chargeback.

Send invoices in advance. This gives customers a chance to
raise any issues and, if necessary, cancel a payment before it is
made.

Follow the Direct Debit scheme rules. Make sure you or your
provider precisely follow the rules around mandates and timings.

Minimising the risk of chargebacks with GoCardless

Our processes are designed to minimise the risk of
our clients receiving an indemnity claim:

Invoices sent in advance for you. We give your customers three
days notice of any payments via email.

Provide clear contact information and good customer service.
GoCardless offer a first stop for customer support. We help you
to manage any chargeback claims from your customers.

Immediately notify you of any claims. We will notify you of any
claims immediately and then work with you and your customer to
understand the reason and retake the payment if appropriate.

Follow the Direct Debit scheme rules. GoCardless keep up to
date with all Direct Debit scheme rules. We precisely follow all the
Direct Debit rules and help you to do the same.